A credit card is a handy tool, but it could also make terrible damage if if used improperly. So get the right credit card and follow some safety rules. Written here are some things take into account before selecting a credit card.
Determine how you plan to use the credit card. Do you plan on paying in full month to month without fail, or do you anticipate carrying a balance each month? Are you going to use the credit card only for emergencies or for your daily needs?
If you plan yo pay your bill in full every month, the interest does not matter. Look for a credit card provider who offers a longer grace period and with no annual fee, in order to avoid finance charge. If you are planning to carry a balance, you would want a low introductory rate and the lowest possible interest rate.
If you are going to make use of the card for your daily needs, look for a credit card with solid reward program and a generous credit limit. If you’re planning to use it only for emergencies, choose a credit card with a low interest rate and low fees.
The interest rate appears as the annual percentage rate (APR), on a credit offer. It could either be a variable rate or a fixed rate that’s tied to another financial indicator, which is commonly the prime rate. With a credit card with fixed rate, you can know what the interest rate will be each month. A credit card with a variable rate will fluctuate. But even with a fixed-rate credit card, the interest rate could fluctuate based on some factors, including paying off card late or going over the limit. Or because the credit card issuer makes adjustments to it. Yes, they can do so, after you receive a notification.
Credit limit is the amount of money which the card issuer is willing to lend you. Depending on your credit history, it could be a small to big amount. Avoid situations where you’re close to maxing out the credit limit, otherwise, you will hurt your credit score. And some credit card providers cut the limit of customers to an amount that is lower than their current balance. When this happens, you could be charged with penalty fees.
PENALTY AND CHARGES
There are many ways a credit card issuer can make money off you. Some common charges are include transaction fees, like cash advance and balance transfer, or paying through telephone, or asking to increase credit limit. You could also be charged for a late payment as well as going over the limit.
For free legal advice on financial and banking matters, visit cclswa.org.au by following the link.